Question 1

The equation that breaks GDP down by the four sources of aggregate spending is:

Accepted Answer

A) GDP = C + I + G + X + IM. 
B) GDP = C + I + G - X - IM. 
C) GDP = C - I - G - X + IM. 
D) GDP = C + I + G + X - IM. 
A) GDP = C + I + G + X + IM. 
B) GDP = C + I + G - X - IM. 
C) GDP = C - I - G - X + IM. 
D) GDP = C + I + G + X - IM.

Question 2

The price index in the base year is normalized so that it equals 100 in the base year.

Accepted Answer

A) True 
 B)False

Question 3

Use the following to answer questions :
Table: Per Capita GDP
  
-(Table: Per Capita GDP) Look at the table Per Capita GDP. If 2011 is the base year, real GDP in 2014 was:

Accepted Answer

A) $400. 
B) $3,000. 
C) $4,000. 
D) $80,000. 
A) $400. 
B) $3,000. 
C) $4,000. 
D) $80,000.

Question 4

Which of the following price indexes measures the cost of living?

Accepted Answer

A) producer price index 
B) wholesale price index 
C) consumer price index 
D) GDP deflator 
A) producer price index 
B) wholesale price index 
C) consumer price index 
D) GDP deflator

Question 5

The producer price index usually responds to price changes more quickly than the consumer price index.

Accepted Answer

A) True 
 B)False

Question 6

The value of _____ is counted in GDP.

Accepted Answer

A) glass for windshields purchased by a car manufacturer 
B) a new car sold by a dealer 
C) a used car sold by a dealer 
D) a share of stock in a car manufacturer 
A) glass for windshields purchased by a car manufacturer 
B) a new car sold by a dealer 
C) a used car sold by a dealer 
D) a share of stock in a car manufacturer

Question 7

The GDP deflator for a given year is 100 times _____ GDP for that year _____ GDP for that year.

Accepted Answer

A) nominal; divided by real 
B) real; divided by nominal 
C) nominal; minus real 
D) real; plus nominal 
A) nominal; divided by real 
B) real; divided by nominal 
C) nominal; minus real 
D) real; plus nominal

Question 8

Suppose that the market basket for the university student price index (USPI) consists of 5 textbooks and 100 gallons of gasoline. In 2010, the base year for this index, textbooks cost $50 each and gas cost $1 per gallon. In 2011, textbooks cost $80 each and gasoline cost $3 per gallon. The USPI for 2011 is:

Accepted Answer

A) 100. 
B) 150 
C) 200. 
D) 250. 
A) 100. 
B) 150 
C) 200. 
D) 250.

Question 9

If real GDP falls when nominal GDP increases, then prices have increased.

Accepted Answer

A) True 
 B)False

Question 10

Use the following to answer questions :
Table: Price and Output Data  
-(Table: Price and Output Data) Look at the table Price and Output Data. Between years 4 and 5, real GDP:

Accepted Answer

A) decreased by 14%. 
B) did not change. 
C) increased by 3%. 
D) increased by 17%. 
A) decreased by 14%. 
B) did not change. 
C) increased by 3%. 
D) increased by 17%.

Question 11

If the consumer price index changes from 120 to 125 between December 2009 and December 2010, the:

Accepted Answer

A) inflation rate for 2010 is 4.2%. 
B) inflation rate for 2010 is 5%. 
C) deflation rate for 2010 is 5%. 
D) deflation rate for 2010 is 4.2%. 
A) inflation rate for 2010 is 4.2%. 
B) inflation rate for 2010 is 5%. 
C) deflation rate for 2010 is 5%. 
D) deflation rate for 2010 is 4.2%.

Question 12

Use the following to answer questions:
Figure: Expanded Circular-Flow Model  
-(Figure: Expanded Circular-Flow Model) Look at the figure Expanded Circular-Flow Model. The government has a budget:

Accepted Answer

A) surplus of $150. 
B) surplus of $220. 
C) deficit of $70. 
D) deficit of $200. 
A) surplus of $150. 
B) surplus of $220. 
C) deficit of $70. 
D) deficit of $200.

Question 13

Firms demand resources in the factor markets.

Accepted Answer

A) True 
 B)False

Question 14

Goods that are produced in a particular period but NOT sold in that period:

Accepted Answer

A) go into inventory and are called consumption. 
B) end up in inventory and are included in investment. 
C) are finally included in depreciation when they are sold. 
D) are classified as intermediate goods. 
A) go into inventory and are called consumption. 
B) end up in inventory and are included in investment. 
C) are finally included in depreciation when they are sold. 
D) are classified as intermediate goods.

Question 15

Use the following to answer questions :  
-(Scenario: Market Basket) Look at the scenario Market Basket. What is the value of the price index in 2011?

Accepted Answer

A) 100 
B) 90 
C) 111 
D) 132 
A) 100 
B) 90 
C) 111 
D) 132

Question 16

GDP is:

Accepted Answer

A) the total dollar value of all transactions in a year. 
B) the total value of all final goods and services produced in a year. 
C) the total value of all final goods and services produced by Americans at home and abroad in a year. 
D) the total dollar value of all goods produced in the economy in a year. 
A) the total dollar value of all transactions in a year. 
B) the total value of all final goods and services produced in a year. 
C) the total value of all final goods and services produced by Americans at home and abroad in a year. 
D) the total dollar value of all goods produced in the economy in a year.

Question 17

The dollar value of final goods and services only is counted in GDP because:

Accepted Answer

A) we can measure only the value of final goods and services, not the value of inputs. 
B) if we counted the value of all goods, we would count inputs, like the value of steel in a new automobile, more than once. 
C) intermediate goods reduce GDP. 
D) only final goods and services matter for the economy. 
A) we can measure only the value of final goods and services, not the value of inputs. 
B) if we counted the value of all goods, we would count inputs, like the value of steel in a new automobile, more than once. 
C) intermediate goods reduce GDP. 
D) only final goods and services matter for the economy.

Question 18

Use the following to answer questions :
Table: Lemonade and Cookies
  
-(Table: Lemonade and Cookies) Look at the table Lemonade and Cookies. Assume that an economy produces only lemonade and cookies. Assuming 2013 was the base year, the growth rate of real GDP from 2013 to 2014 was:

Accepted Answer

A) 5%. 
B) 10%. 
C) 11.25%. 
D) 20%. 
A) 5%. 
B) 10%. 
C) 11.25%. 
D) 20%.

Question 19

Use the following to answer questions:
Scenario: Real GDP
Suppose that in year 1 an economy produces 100 golf balls that sell for $3 each and 75 pizzas that sell for $8 each. The next year the economy produces 110 golf balls that sell for $3.25 each and 80 pizzas that sell for $9 each.
-(Scenario: Real GDP) Look at the scenario Real GDP. The value of nominal GDP in years 1 and 2 respectively is:

Accepted Answer

A) $900 and $1,077.50. 
B) $900 and $990. 
C) $180,000 and $257,400. 
D) $1,000 and $1,005. 
A) $900 and $1,077.50. 
B) $900 and $990. 
C) $180,000 and $257,400. 
D) $1,000 and $1,005.

Question 20

Robert McNamara developed the national income accounts in the early 1970s to document spending on the Vietnam War.

Accepted Answer

A) True 
 B)False

The equation that breaks GDP down by the four sources of aggregate spending is:

The price index in the base year is normalized so that it equals 100 in the base year.

Use the following to answer questions : Table: Per Capita GDP -(Table: Per Capita GDP) Look at the table Per Capita GDP. If 2011 is the base year, real GDP in 2014 was:

Which of the following price indexes measures the cost of living?

The producer price index usually responds to price changes more quickly than the consumer price index.

The value of _____ is counted in GDP.

The GDP deflator for a given year is 100 times _ GDP for that year _ GDP for that year.

If real GDP falls when nominal GDP increases, then prices have increased.

Use the following to answer questions : Table: Price and Output Data -(Table: Price and Output Data) Look at the table Price and Output Data. Between years 4 and 5, real GDP:

If the consumer price index changes from 120 to 125 between December 2009 and December 2010, the:

Use the following to answer questions: Figure: Expanded Circular-Flow Model -(Figure: Expanded Circular-Flow Model) Look at the figure Expanded Circular-Flow Model. The government has a budget:

Firms demand resources in the factor markets.

Goods that are produced in a particular period but NOT sold in that period:

Use the following to answer questions : -(Scenario: Market Basket) Look at the scenario Market Basket. What is the value of the price index in 2011?

GDP is:

The dollar value of final goods and services only is counted in GDP because:

Use the following to answer questions : Table: Lemonade and Cookies -(Table: Lemonade and Cookies) Look at the table Lemonade and Cookies. Assume that an economy produces only lemonade and cookies. Assuming 2013 was the base year, the growth rate of real GDP from 2013 to 2014 was:

Robert McNamara developed the national income accounts in the early 1970s to document spending on the Vietnam War.

First Principles

Economic Models

Supply and Demand

International Trade 5

Macroeconomics: the Big Picture

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters

Exam 7: Gdp and Cpi: Tracking the Macroeconomy

The equation that breaks GDP down by the four sources of aggregate spending is:

The price index in the base year is normalized so that it equals 100 in the base year.

Use the following to answer questions : Table: Per Capita GDP -(Table: Per Capita GDP) Look at the table Per Capita GDP. If 2011 is the base year, real GDP in 2014 was:

Which of the following price indexes measures the cost of living?

The producer price index usually responds to price changes more quickly than the consumer price index.

The value of _____ is counted in GDP.

The GDP deflator for a given year is 100 times _____ GDP for that year _____ GDP for that year.

If real GDP falls when nominal GDP increases, then prices have increased.

Use the following to answer questions : Table: Price and Output Data -(Table: Price and Output Data) Look at the table Price and Output Data. Between years 4 and 5, real GDP:

If the consumer price index changes from 120 to 125 between December 2009 and December 2010, the:

Use the following to answer questions: Figure: Expanded Circular-Flow Model -(Figure: Expanded Circular-Flow Model) Look at the figure Expanded Circular-Flow Model. The government has a budget:

Firms demand resources in the factor markets.

Goods that are produced in a particular period but NOT sold in that period:

Use the following to answer questions : -(Scenario: Market Basket) Look at the scenario Market Basket. What is the value of the price index in 2011?

GDP is:

The dollar value of final goods and services only is counted in GDP because:

Use the following to answer questions : Table: Lemonade and Cookies -(Table: Lemonade and Cookies) Look at the table Lemonade and Cookies. Assume that an economy produces only lemonade and cookies. Assuming 2013 was the base year, the growth rate of real GDP from 2013 to 2014 was:

Robert McNamara developed the national income accounts in the early 1970s to document spending on the Vietnam War.

First Principles

Economic Models

Supply and Demand

International Trade 5

Macroeconomics: the Big Picture

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters

The GDP deflator for a given year is 100 times _ GDP for that year _ GDP for that year.